Teacher Retirement System assets fall by $7.2 billion in two months

[flashl]

A billion here, a billion there… . the Teacher Retirement System’s assets have decreased by $7.2 billion in a little more than two months — a big chunk of change, but only a 6 percent drop in the value of the portfolio.

It’s no surprise given the recent decline in global equity markets, and it does not mean much if anything for the long term health of the fund. Still, the number is a grabber.

The pension fund’s assets stand at $107.5 billion today compared with $114.7 billion on Nov. 30, according to materials presented to the TRS board of trustees today.

The system didn’t break down January’s investment performance, but a look at the final four months of 2007 shows where the money went.

For September through December, fixed income was down $3.6 billion, the equities portfolio decreased by $8.6 billion, but alternative investments increased by $3.3 billion. Alternatives is a big catch-all category that includes hedge funds, buyout funds, venture capital and real estate.

Statesman

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Texas teachers aim to profit from mortgage credit meltdown

The Teacher Retirement System of Texas has committed to invest $475 million in the new Pimco Distressed Mortgage Fund LP. The Pimco fund is estimated to be $2 billion, meaning the Texas teacher fund has a hefty 24% stake.

The teacher fund has already invested $142.5 million of the total it committed to the Pimco fund, which intends to invest in distressed mortgage and real estate-related debt. The bet is that prices of these instruments have fallen so much that there is big money to be made, even if mortgage defaults continue to roll on.

In materials presented to the Fresno County (Calif.) retirement system last fall, Pimco said it expects to earn 15% to 20% annual returns. Public pension and investment returns in New Jersey, Oklahoma and California are also investing.

...

Speed is a different issue. Last year, the teacher fund’s board of trustees gave its investment staff, led by Chief Investment Officer Britt Harris, the authority to make large investments without approval of the board or its private markets committee. The idea was to allow Harris to move quickly when the fund hit upon promising investment ideas.

Statesman

[Warpy]

1. Pension funds will be especially hard hit by the hedge funds

debacle that's only beginning. They all started running scared about the number of boomers who will be retiring and made risky investments. Pension funds were targeted by these hedge fund guys as suckers who needed to make a lot of paper profit fast. Most of them will be left completely underfunded, leaving a lot of boomers Social Security plus only a few bucks a month to live on, want fries with that?

[flashl]

2. Retirees competing w/college graduates for slave wage jobs is not a promising future. nt

[AnneD]

3. They were also trying to force the TRS...

to invest in a certain amount of high risk ventures. That was totally nixed. We lost a lot in the Enron debacle. Folks aren't happen with how Perry and his appointees have been managing it. Retired teachers DO watch their money. We are still better funded than most but folks watch it like a hawk.